Inventory Turnover
A ratio measuring how many times a retailer's total inventory is sold and replaced within a defined period.
Full Definition
Inventory turnover (also written as 'stock turn' or 'stock turnover') is calculated by dividing cost of goods sold (COGS) by average inventory value over a period. A high turnover ratio suggests efficient stock management and strong sales velocity, while a low ratio may indicate overstocking or slow-moving products. In retail analytics reports, the metric is commonly expressed as a number of 'turns' per year. Editors should ensure the formula denominator is explicitly stated, as some organisations use average inventory while others use closing inventory, which can yield materially different results.
Usage
Usage note: Not interchangeable with sell-through rate. Always state whether average or closing inventory is used as the denominator.
In Context
- "The grocery division achieved an inventory turnover of 24 times per year, compared with 8 turns for the general merchandise division." — Supply chain analytics report
- "Ensure 'inventory turnover' is not used interchangeably with 'sell-through rate'; the two metrics use different denominators and timeframes." — Analytics editorial style guide